The video game industry has always been in a state of flux, but the past few years have been particularly turbulent. AAA publishers continue to chase larger, riskier bets, while indie developers face their own struggles in an oversaturated market. As budgets soar and layoffs become more common, the industry is at a crossroads.
Indies Leading the Way
For many gamers, 2024 has been the year of indie games. Irene, a lifelong gamer, sums it up best:
“But this year, if anything, has proven that thankfully, gaming isn’t resting on the shoulders of AAA anymore, which is something I’m grateful for… At least as far as I’m concerned, indies have made 2024 for me. I can count on one hand when it comes to AAA games that have impressed me this year, while fingers are almost not enough to count the same for smaller-scale releases.”
This sentiment is shared by many players who have found indie gems to be more innovative and engaging than their AAA counterparts. Titles like Lorelei and the Laser Eyes and SteamWorld Heist 2 have already been hailed as 10/10 experiences by some, demonstrating the strength of smaller-scale development.
Indie games thrive in an environment where they are not burdened by the immense pressure of blockbuster budgets. They can take risks, experiment, and prioritize creative vision over mass-market appeal. But despite their successes, indies are also grappling with a major challenge: visibility. With over 14,000 games released on Steam this year alone, standing out in a crowded market is an uphill battle.
AAA’s Self-Destructive Cycle
AAA publishers are stuck in a relentless cycle of escalating budgets and marketing costs. As Chris Plante, co-founder of Polygon, puts it:
“AAA video game publishers have doubled down on what worked in the past to differentiate themselves in this market, making their games bigger and more realistic. As development budgets soar, so do marketing budgets meant to provide some reassurance to these increasingly risky bets. Higher costs mean higher sales goals mean bigger games and bigger marketing to meet those goals, in turn spurring higher costs. Snake, meet tail.”
The results? Over 10,000 layoffs in 2023 and even more in the first half of 2024. The industry’s obsession with scale has led to a brutal reality: only one game can be the No. 1 hit, and hundreds of studios are competing for that spot. The dominance of live-service titles like Call of Duty and Fortnite further reduces the time and money players are willing to spend on new releases, creating a vicious cycle where even promising AAA games struggle to make an impact.
Funding and Development Challenges
For both indie and AAA developers, securing funding has become increasingly difficult. Many indie teams have resorted to self-funding, with 56% of developers putting their own money into their projects. Meanwhile, investment in new games has slowed, and the market is adjusting to a post-pandemic downturn.
Moreover, tech giants are poaching talent from the gaming industry, offering salaries and benefits that game studios simply can’t match. The result? A talent drain that further hampers game development. This, combined with a shrinking consumer spend on new releases, has led to a gaming industry that feels simultaneously massive and unstable.
The Need for Change
If the industry is to survive and thrive, change is necessary. Developers and publishers must rethink their approach to game development, focusing on sustainable practices. As Xalavier Nelson, studio head of El Paso, Elsewhere developer Strange Scaffold, warns:
“’Survive till ’25’ assumes that we are encountering a long winter rather than having burned our own crops for three years previous. Unless we start planting differently, unless we start changing the way we work and think about making games, then we’re going to continue to see the highest highs and the lowest lows that games has ever seen. And it might, in fact, just get worse.”
One major shift should be a focus on smaller, more manageable games. Instead of 40- to 60-hour epics, the industry could benefit from more 6- to 14-hour experiences with shorter development cycles. A pricing restructure may also be necessary to reflect the changing nature of game consumption, particularly with the rise of subscription services like Xbox Game Pass and EA Play.
The Industry’s Future
Despite the turbulence, the gaming industry continues to grow, with the number of global players expected to exceed 3.75 billion by 2027. PC gaming has shown the highest growth in 2024, and analysts predict that consoles will regain momentum in 2025. However, the AAA segment must adapt to avoid further decline.
Live-service fatigue, increasing competition, and economic instability have created a challenging environment, but there is still hope. Developers must embrace diversification, focus on creative storytelling, and prioritize community engagement. The industry has an incredible potential to evolve, but only if those in charge make the right decisions.
For now, indie games are carrying the torch of innovation, and many players are looking to them to keep gaming fresh and exciting. Whether AAA publishers will adapt or continue their self-destructive habits remains to be seen. One thing is certain, though: the love for gaming remains strong, and the industry must do everything it can to nurture and sustain that passion.
I love video games, and I hope that things get better.
